Embattled crypto lender Celsius Networks is preparing to file for Chapter 11 bankruptcy protection, according to a new report.
CNBC reported late Wednesday that the New Jersey-based company was in the process of notifying state regulators about its filing, which reportedly was coming “imminently.”
Celsius and its representatives did not immediately reply to a MarketWatch request for confirmation or comment.
Celsius froze all user withdrawals and transfers about a month ago, citing “extreme market conditions” as the crypto market plunged. The company said at the time that bankruptcy was an option and that it was also looking at restructuring its debts.
A number of other crypto lending platforms followed suit freezing withdrawals due to the crypto crash, including Babel Finance and CoinFlex, while digital-asset broker Voyager filed for Chapter 11 in New York last week, and crypto hedge fund Three Arrows Capital filed for bankruptcy and was ordered to liquidate in recent weeks.
Later in June, Celsius said its “objective continues to be stabilizing our liquidity and operations,” which would “take time.”
Earlier this month, the former head of the company’s key investment strategy sued, claiming Celsius operated as “a Ponzi scheme” and used investor deposits to cover massive liabilities.
“Celsius grossly mismanaged its customer funds, failed to perform basic internal auditing to account for its obligations, and manipulated crypto-assets to the benefit of itself and its principals,” the lawsuit alleged.
On Sunday, the Wall Street Journal reported Celsius had hired new lawyers for restructuring advice, including a potential bankruptcy option.
The company reported $11.8 billion in assets in May, with about 1.7 million users.
Cryptocurrency prices have tumbled this year, with bitcoin
off about 50% over the past three months — and down 57% year to date — while ethereum
is down 63% over the past three months, and off 70% in 2022.